AP Automation and Oracle. An Industry Perspective and Lessons Learned in the Oracle ERP market

Transcription

1 AP Automation and Oracle An Industry Perspective and Lessons Learned in the Oracle ERP market

2 Introduction Ron Kelley Principal and VP Business Development

3 Premise The problems we have today cannot be solved by thinking the way we thought when we created them Albert Einstein

4 A Few of our Clients

5 Agenda Questions we will address today: What factors are driving AP Automation initiatives? How have companies benefited from automating AP? Lessons learned what works, what doesn t and why? Why isn t everyone automating AP? What are some common mistakes made in an AP Automation project? How much AP Automation do you really need? Examples from real Oracle customers

6 AP Automation Defined Extending and enhancing your ERP systems existing AP functionality with technology and business process change applied to the vendor payment cycle. Generally, moving away from a traditionally manual processing model for data entry and document management by incorporating technologies like optical character recognition (OCR) for invoice data capture, document imaging, workflow and companion technologies to transform the AP process into a more automated model.

7 Different perspectives and their implications to Accounts Payable CEO Our cost of capital and material costs are too high. Financial Analyst Use of cash discounts is low, cost of capital is rising. CFO My cost of accounts payables is not state-of-the-art and I have poor visibility to key metrics. Purchaser We could lower the cost of goods if we could make systematic use of cash discounts. Accounts Payables We spend up to 50% of our time chasing paper and responding to calls and s from suppliers requesting status of invoice or complaining about late payment. Accounting We cannot say which invoices we have received across different departments and we have no control over the time-to-payment. Supplier Doing business with that company is difficult as they are unable to tell when they pay their invoices.

8 Summary of Key Issues Costs of capital, material, and processing accounts payable are too high Lack of visibility to what invoices have been received and overall financial liability Lack of control over the time-to-payment Use of cash discounts is low Spending up to 50% of time with paper chasing and/or responding to suppliers requesting payment status or complaining about late payment

9 The Changing Role of Accounts Payable Gone are the days when a large part of the AP function was focused on entering data and processing payments. Now the focus is shifting to analysis and exception handling, which require higher-level problem-solving skills. The result is an AP function that is evolving to best benefit the ever-changing business culture it supports. Source: Are you ready for lean AP? 4 trends to watch in 2012 (IFO) 9

10 Challenges to AP Efficiency Three main challenges identified by AP departments are: Manual Data Entry Routing for Approval Resolving Errors/Exceptions Source: IAPP-TAWPI 2010

11 Perceived Benefits *IFO November 2011

12 *Faster turnaround times *Improved reporting, visibility and control *Drive out costs (lower cost-per-transaction) Avoid duplicate payments Better support for segregation of duties The benefits are improved Improved cash management/working capital/liquidity Unrecorded liabilities recognized sooner Prompt payment discounts/negotiate favorable terms No lost documents Improved audit support Fraud reduction Reduce backlog/smoother closings Better data to manage the business using KPI s AP job satisfaction (from clerical to analytical role) business outcomes Upgrade your work processes to be more agile while upgrading your employees jobs Drive up predictability *IFO November 2011

13 Lessons Learned Why isn t everyone automating AP? If AP Automation has such great potential benefit, why isn t every company jumping on board? Let s look at some of the reasons our Oracle prospects and clients have shared with us as to why they held back and review some of the lessons learned from their experiences.

14 5 responses to why we have not automated AP 1. Perceived to be too expensive to justify 2. We want to select and implement a solution in 90 days so send me a quote! 3. There are too many confusing choices a. vendors, solutions, technology 4. We hate dealing with paper, but we are skeptical that AP automation technology will truly work 5. We tried implementing AP automation and it did not meet our expectations

15 Responses to why we have not automated AP 1. Perceived to be too expensive to justify a. This can be a self fulfilling prophecy if you take no action to validate your assumptions about cost/benefit. Begin to build a solid business case by understanding current processes, their costs and challenges. This base-lining will help you measure the ROI on the potential solutions don t merely assume you can t afford a good solution.

16 Oracle example #1 A Midwest manufacturer believed that invoice automation was only for the biggest companies and not for them. When probed for why they felt that way, the real reason surfaced - they did not know where to begin building a business case. When they engaged their team to collect information and document challenges with current processes, they discovered enough justification for a less than 12 month payback and many additional improved outcomes. Lesson learned: every day you continue to do things the old way is potentially a day of lost benefits. There is a solution today for every business industry and size.

17 Lessons learned in AP automation projects 2. We want to select and implement a solution in 90 days so send me a quote! a. Automating AP is like any other business process challenge. It begins with a problem diagnosis before prescribing a cure.

18 Oracle customer example #2 A transportation company selected a lowest-cost bid from a request for quote and implemented it without building a strong business case the results were disastrous Lesson learned: know your current AP processes, their problems and your business objectives before even talking to vendors and asking for quotes Or you may end up with a bad process, but now automated We ve got some scanners, lets go! Take a shortcut here and you will regret it later

19 3 rd response to why we have not automated AP 3. There are too many confusing choices a. vendors, solutions, technology 1. On-premise, SaaS, cloud, outsourced options can all sound pretty much alike but they are not equally viable in all situations Lesson Learned: choices should always be made in light of carefully defined business requirements, ERP compatibility and resource constraints (time, people and budget) -and your company culture.

20 Oracle customer example #3 A major US home builder made several technology miscues before getting it right. Implemented an AP automation initiative by trying to use technology they already owned, which was unsuitable for the job Compounded it by making the same mistake again Lesson learned: choose technology suitable for the task. One size does not fit all ECM/BPM challenges.

21 4 th response to why we have not automated AP 4. We hate dealing with paper, but we are skeptical that AP automation technology will truly work a. This could be a fear of the unknown, lack of knowledge about current technologies or perhaps a prior bad technology experience b. It is easily addressed by competent vendors who will take the challenge to prove to you that their systems work in live demos and also offer relevant references for the efficacy of their solutions

22 Oracle customer example #4 Top management in a large construction firm was unconvinced that their volumes and data extraction requirements could be accommodated by current technology they remain unconvinced and are falling behind their competitors in AP effciency Lesson learned: rather than say it won t work for us, ask potential vendors to assign their A team to show you a proof of concept after of course you have defined your specific requirements and concerns.

23 5 th response to why we have not automated AP 5. We tried implementing AP automation and it did not meet our expectations This reason is usually a combination of things that have gone awry: a. Poor planning and expectation setting b. Poor execution during implementation c. Inappropriate vendor selection d. Scope creep e. Ownership issues

24 Oracle customer example #5 A property management firm was an early adopter of OCR (optical character technology) and a failed workflow implementation now skeptical at best. Lesson learned: don t let an earlier bleeding edge technology decision or failed project keep you from reaping the benefits of available solutions. Be willing to look at today s options while learning from past decisions.

25 Common mistakes made in failed AP Automation projects Lack of full commitment to process change from leadership Failure to involve all affected people and business groups Underestimating or understaffing your resource requirements Failure to focus on the benefits (outcomes) from the process changes AIIM study 2010

26 Common Implementation Issues 45% process/organizational issues 41% staff knowledge/training 30% internal politics 29% scope creep AIIM study 2010

27 More tips, techniques and lessons learned Train your team to understand process change Follow a structured process for the project Ask tough questions don t assume Listen to people on the front line Automation alone is never the answer Keep all stakeholders informed

28 AP automation: not just all or nothing Key-fromimage Option #1 KFI Only with Workflow Primary method of data entry Option #2 Non-PO OCR Also available as required Option #3 PO OCR Summary Level Also available as required Option #4 PO OCR Detail Line Items Also available as required OCR scanning No Summary Summary Detail Workflow Yes Yes Yes Yes AutoMatch No No Subtotal Line level AutoVoucher* No Yes Yes Yes Key benefit Common benefits to look for Rapid implementation Cost/benefit Reduced data entry with OCR plus automated *vouchering Match exception handling Certified ERP integration Workflow approval Storage of documents and transaction history Document scanning and capture software Advanced reporting *AutoVoucher and Vouchering are used generically to indicate distribution into ERP Virtual hands-free *vouchering

29 Barriers to getting underway *IFO November 2011

30 Top 5 tips to get an AP Automation project started on the right track 1. Form a project team early on before you even begin to vote on a vendor choice 2. Develop a solid business case 3. Gather requirements from all the stakeholders 4. Develop a scorecard for vendors that is consistent with your requirements 5. Now you can begin to research potential vendor partners

31 One slide project plan

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